Wobbly Asian Economies Put Imf Credibility To Test

WASHINGTON — Michel Camdessus, managing director of the International Monetary Fund, doesn't usually reveal his secret meetings with officials of financially strapped countries.

But the Frenchman recounted how he and deputy Stanley Fischer traveled to Seoul in November to warn top South Korean leaders in private that their economy was hurtling toward disaster.

Camdessus said he and Fischer ``visited Korea separately in a totally discreet way to tell the authorities that it was essential to take action with no delay. They had, as many others, a tremendous difficulty in recognizing the facts.''

So the South Koreans failed to respond to threats of a massive exodus of foreign capital, Camdessus said, and by the time they began scrambling later that month, ``it was too late.''

Seldom, if ever, in the IMF's 53-year history has it faced such a daunting challenge to its competence in maintaining global financial stability.

Although the fund, acting in concert with the Clinton administration, has marshaled more than $100 billion in the past three months to bail out the economies of Thailand, Indonesia and South Korea, the financial crisis in Asia shows only spotty signs of abating.

Camdessus disclosure of the secret meetings in Seoul was strategic, not impulsive, for he is defending the IMF against charges that it misjudged the crisis and is floundering in its effort to contain it.

Critics are citing the grim news from the region's financial markets as evidence that the IMF, a 181-nation organization based in Washington, should drastically change its approach for rescuing troubled economies.

The fund doles out loans to countries that are short of the U.S. dollars and other currencies they need to pay obligations to foreigners. In exchange, the countries pledge to adopt belt-tightening measures and take steps to restructure their economies such as scrapping government regulations and liberalizing their markets.

Nowhere is an IMF program as dangerously close to collapse as in South Korea, which received a second, $3.5 billion installment of its $57 billion rescue package Thursday, the same day longtime dissident Kim Dae Jung won the nation's presidency.

IMF officials predict that South Korea and its ailing Asian neighbors will recover because, after an initial period of half-heartedly accepting the need for economic policy change, they are starting to move more aggressively.